Soul Pattinson warns of MRRT impact on New Hope

Washington H Soul Pattinson
chairman
Robert Millner
has joined the chorus of mining companies opposed to the government’s proposed minerals resources rent tax, warning it will impact future earnings of the company’s subsidiary, New Hope Corp.

Soul Pattinson has 60 per cent of New Hope, which Mr Millner also chairs. The company has open cut coal mines at Acland on the Darling Downs and at Rosewood near Ipswich, both in Queensland.

In a letter to shareholders, Mr Millner said initial modelling based on the proposed tax suggests long term shareholder returns from New Hope’s mining operations would fall by more than 10 per cent. He also warned it could impact future earnings of Soul Pattinson.

“In the absence of draft legislation or implementation details, it is difficult to provide reliable information to shareholders on how the proposed tax would impact the company’s operations or corporate activities," Mr Millner said.

“However, based on the limited information currently available, initial modelling suggests that long-term shareholder returns from our mining operations will reduce by more than 10 per cent due to the increased tax burden."

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Mr Millner called on shareholders to consider the potential impact of the proposed MRRT when voting in this Saturday’s federal election.

“The government has clearly stated that it expects to raise $10.5 billion in revenues from this new tax – revenue that can only be raised with a proportionate reduction in the earnings of projects affected by the tax.

“While the direct impact will be borne by mining companies and their shareholders, the indirect effect of this new tax will no doubt touch employees and their families, suppliers to the mining industry, mining communities and the wider Australian population, all of whom depend on the sustained profitability of mining projects."